Insurance and investment companies have a broad reach. These companies provide a myriad of products including life insurance, group and employee benefits, automobile and homeowners insurance, and business insurance, as well as investment products, annuities, mutual funds and college savings plans. Some insurance companies maintain offices across the United States, Japan, United Kingdom, Canada, Brazil, and Ireland, for example. These companies serve millions of customers throughout the world, and the customers include individuals, institutions, and businesses. The service of these customers may be through independent agents and brokers, financial institutions, and online mechanisms.
As a result of doing business and providing services and products in a myriad of locations, insurance companies may be subject to extensive regulations and constant changes in legislation. Specifically, insurance companies may be subject to complex laws and regulations that are administered and enforced by a number of governmental authorities, including state insurance regulators, the Security and Exchange Commission (SEC), National Association of Insurance Commissioners (NAIC), the U.S. Department of Justice, state attorneys general, and the Internal Revenue Service (IRS), as well as governmental authorities in other countries such as the Ministry of Finance (MOF) in Japan and the Financial Services Authority (FSA) in the United Kingdom, for example. Each of these authorities interprets legal and regulatory issues in their own way. So in addition to changes in the overall legal or regulatory environment, particular authorities' interpretations of issues change the landscape and require insurance companies to change their views regarding the actions needed from a legal and/or regulatory risk management perspective possibly necessitating changes to practices and procedures.
Insurance companies are regulated and supervised to protect the insurance policyholders. This regulation and supervision may vary from location to location and from political climate to political climate, but generally is governed by state statutes in the United States and by the FSA in the United Kingdom and the MOF in Japan. These regulations may establish standards related to the setting of premium rates, minimum capital requirements and solvency margins, restrictions on the nature, quality and concentration of investments, restrictions on the types of terms and conditions that may be included in the insurance policies, limitations on the amount of dividends that may be paid and/or foreign profits that can be repatriated, required methods of accounting, reserves for unearned premiums, losses and other purposes, administrative practice requirements, assignment of residual market business and potential assessments for the provisions of funds necessary for the settlement of covered claims, and impositions of fines and other sanctions. State insurance regulators and the NAIC regularly re-examine existing laws and regulations applicable to a company and its products. Changes in these laws and regulations, or in the interpretations of the laws and regulations, may affect the operations of insurance companies.
Generally, the U.S. federal government does not directly regulate the business of insurance. However, federal legislation and administrative policies can significantly affect insurance companies. The legislation and policies may include financial services reform legislation, securities regulation, pension regulation, privacy, tort reform legislation and taxation. In addition, there are various forms of Federal oversight and possible regulation of insurance that had been discussed and/or implemented at the federal level including the Wall Street Reform and Consumer Protection Act, which establishes the Federal Insurance Office within the Department of Treasury to monitor the insurance industry, identify gaps in regulation of insurance, provide a Federal charter for insurers, and identify insurers that should be subject to stricter standards. Additionally, the federal government has enacted major health reform legislation that changes the landscape of the U.S. health care insurance marketplace including individual and employer mandates, health insurance exchanges, coverage and its inclusion, medical loss ratios, government reimbursements and subsidies, as well as altering the federal and state regulation of health insurers.
Compliance with the laws and regulations can be time-consuming and personnel intensive, and changes in the laws and regulations, as well as the interpretations of the laws and regulations by the governing bodies, increases the compliance conundrum. Thus far, companies use multiple databases and spreadsheets created by many individuals to track issues resulting from legislation and regulations, audits, and the like. Generally, there has been no central repository and no means of meaningful reporting. In total, compliance, and legislative and regulatory monitoring is inefficient and time-consuming.
Thus, there exists a need for a system and method that simplify a complex manual process of monitoring and complying with regulations and changes in legislation to gain efficiencies and identify impacts to insurance companies and track the end-to-end process in support of these impacts across the lines of business of the insurance company while maintaining data integrity and eliminating key-person dependencies.